Navigating the Shifting CFIUS Landscape: New CFIUS Guidance Ends the Use of Springing Rights for Mandatory Filings and Other Recent Developments

Description

The CFIUS recently issued new FAQs, including to update the Committee’s interpretation of the "completion date" for a transaction. This has significant implications for those who rely on "springing rights" for minority investments subject to CFIUS jurisdiction, because the mandatory filing must be submitted at least 30 days in advance of the completion date.

The new FAQs clarify that the completion date is the date on which the foreign person obtains any equity interest in a U.S. business. This affects when a mandatory filing must be submitted to CFIUS. As a result, parties are effectively unable to use springing rights—which have previously been used to quickly provide capital to U.S. businesses—to avoid the 30-day waiting period. Further, this guidance means that investors using springing rights do not avoid the risk of divestment if CFIUS concludes there are national security risks which cannot be mitigated.

Listen as our authoritative panel examines the new CFIUS guidance stemming from the recently updated FAQs, including CFIUS's interpretation of the "completion date" for a transaction, as well as other recent developments and trends. The panel will discuss this significant change for those who have relied on springing rights for minority investments subject to CFIUS jurisdiction and the implications for the timeline for minority investments. The panel will offer best practices for navigating the CFIUS changes.